UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark one)


[x]		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2003


[ ]		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________________ TO ___________________.

Commission File Number 333-42085

TRANSWESTERN PUBLISHING COMPANY LLC

(Exact name of registrant as specified in its charter)


DELAWARE (State or other jurisdiction of incorporation or organization)		33-0778740 (I.R.S. Employer Identification Number)


8344 CLAIREMONT MESA BOULEVARD SAN DIEGO, CALIFORNIA (Address of principal executive offices)		92111 (Zip Code)

(858) 467-2800
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant is an accelerated filer. Yes [ ] No [X]

TABLE OF CONTENTS


		CONSOLIDATED BALANCE SHEETS
		CONSOLIDATED STATEMENTS OF OPERATIONS
		CONSOLIDATED STATEMENTS OF CASH FLOWS
		NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
	ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTSOF OPERATIONS
	ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
	ITEM 4. CONTROLS AND PROCEDURES
PART II. OTHER INFORMATION
	ITEM 1. LEGAL PROCEEDINGS
	ITEM 2. CHANGES IN SECURITIES
	ITEM 3. DEFAULTS UPON SENIOR SECURITIES
	ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
	ITEM 5. OTHER INFORMATION
	ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURES
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32.1

TRANSWESTERN PUBLISHING COMPANY LLC
FORM 10-Q INDEX


		PAGE

PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets as of September 30, 2003 (unaudited) and December 31, 2002	3
	Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2003 (unaudited) and 2002 (unaudited)	4
	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2003 (unaudited) and 2002 (unaudited)	5
	Notes to Unaudited Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	16
Item 4.	Controls and Procedures	17
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	17
Item 2.	Changes in Securities	17
Item 3.	Defaults upon Senior Securities	17
Item 4.	Submission of Matters to a Vote of Security Holders	17
Item 5.	Other Information	17
Item 6.	Exhibits and Reports on Form 8-K	17
SIGNATURES		18

TRANSWESTERN PUBLISHING COMPANY LLC
CONSOLIDATED BALANCE SHEETS
(in thousands)


			SEPTEMBER 30,			DECEMBER 31,
			2003			2002

			(UNAUDITED)
ASSETS
Current assets:
	Cash		$	2,855		$	17,408
	Trade receivable, (net of allowance for doubtful accounts of $10,850 at September 30, 2003 and $19,694 at December 31, 2002)			80,608			104,257
	Deferred directory costs			35,601			24,312
	Other current assets			2,857			3,433

		Total current assets		121,921			149,410
Non-current assets:
	Property, equipment and leasehold improvements, net			5,077			5,444
	Acquired intangibles, net			208,258			235,121
	Debt issuance costs, net			9,238			10,987
	Deferred tax asset			6,255			8,295

		Total non-current assets		228,828			259,847

Total assets			$	350,749		$	409,257

LIABILITIES AND MEMBER DEFICIT
Current liabilities:
	Accounts payable		$	15,814		$	17,118
	Salaries and benefits payable			9,602			10,034
	Accrued acquisition costs			289			2,165
	Accrued interest			8,268			3,660
	Other accrued liabilities			4,178			4,333
	Customer deposits			53,793			32,642
	Current portion, long-term debt			7,011			6,343

		Total current liabilities		98,955			76,295
Long-term debt:
	Series F Senior Subordinated Notes			215,544			215,643
	Senior credit facility Term A Loan			21,803			26,057
	Senior credit facility Term B Loan			156,186			195,000
	Other long-term liabilities			100			200

		Total non-current liabilities		393,633			436,900

		Total liabilities		492,588			513,195

Member deficit				(141,839	)		(103,938	)

Total liabilities and member deficit			$	350,749		$	409,257

See accompanying notes.

TRANSWESTERN PUBLISHING COMPANY LLC
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands except for per member unit information and member units outstanding)


		THREE MONTHS ENDED						NINE MONTHS ENDED
		SEPTEMBER 30,						SEPTEMBER 30,

		2003			2002			2003			2002

Net revenues		$	75,706		$	75,036		$	207,360		$	238,552
Cost of revenues			14,102			14,211			36,058			43,132

Gross profit			61,604			60,825			171,302			195,420
Operating expenses:
	Sales and marketing		37,800			37,080			104,160			108,007
	General and administrative		15,157			19,199			46,551			52,236

Total operating expenses			52,957			56,279			150,711			160,243

Income from operations			8,647			4,546			20,591			35,177
Other income, net			182			262			600			933
Interest expense			(7,966	)		(8,653	)		(24,590	)		(25,963	)

Income (loss) before taxes			863			(3,845	)		(3,399	)		10,147
Income tax provision			(493	)		(239	)		(3,297	)		(1,042	)

Net income (loss)		$	370		$	(4,084	)		(6,696	)		9,105

Net income (loss) per Member unit		$	370		$	(4,084	)		(6,696	)		9,105

Member units outstanding			1,000			1,000			1,000			1,000

See accompanying notes.

TRANSWESTERN PUBLISHING COMPANY LLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)


			NINE MONTHS ENDED
			SEPTEMBER 30,
				2003			2002

OPERATING ACTIVITIES
Net income (loss)				$	(6,696	)	$	9,105
Adjustments to reconcile net income (loss) to cash provided by operating activities:
	Loss on write-off of fixed assets				—			606
	Depreciation and amortization				30,119			30,563
	Amortization of deferred debt issuance costs				1,748			1,790
	Provision for doubtful accounts				22,934			27,536
	Deferred taxes				2,040			—
	Changes in operating assets and liabilities, excluding the effects of acquisitions:
		Trade receivables			30,425			(10,628	)
		Write-off of doubtful accounts			(33,256	)		(27,695	)
		Recoveries of doubtful accounts			3,695			1,529
		Deferred directory costs			(11,289	)		(1,291	)
		Other current assets			576			(1,529	)
		Accounts payable			572			(3,194	)
		Accrued liabilities			(4,439	)		(4,664	)
		Accrued interest			4,608			4,987
		Customer deposits			21,151			11,696
		Equity trust payable			—			(2,902	)

Cash provided by operating activities					62,188			35,909
INVESTING ACTIVITIES
Purchase of property, equipment and leasehold improvements					(1,131	)		(1,112	)
Acquisition of directories					(2,005	)		(24,046	)
Deferred financing costs and other assets					—			(969	)

Cash used for investing activities					(3,136	)		(26,127	)
FINANCING ACTIVITIES
Borrowings under long-term debt agreements:
	Revolving credit facility				42,050			—
Repayments of long-term debt:
	Revolving credit facility				(42,050	)		—
	Senior term loans				(42,400	)		(3,800	)
Repayments of debt acquired					—			(413	)
Distributions to TransWestern Holdings					(31,205	)		—

Cash used for financing activities					(73,605	)		(4,213	)

Net increase (decrease) in cash					(14,553	)		5,569
Cash at beginning of period					17,408			26,913

Cash at end of period				$	2,855		$	32,482

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest				$	18,774		$	19,126

Cash paid for taxes				$	1,457		$	823

See accompanying notes.

TRANSWESTERN PUBLISHING COMPANY LLC
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(ALL DOLLAR AMOUNTS ARE IN THOUSANDS)

GENERAL

The accompanying unaudited consolidated financial statements include the accounts of TransWestern Publishing Company LLC (the “Company”) and its wholly owned operating subsidiaries, Target Directories of Michigan, Inc. (“Target”) and WorldPages, Inc. (“WorldPages”) and its subsidiaries. All significant intercompany transactions have been eliminated. The Company is an independent yellow page directory publisher and is a wholly owned subsidiary of TransWestern Holdings L.P. (the “Partnership”).

These financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and, in the opinion of management, reflect all adjustments necessary to present fairly the financial position, results of operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States. All adjustments were of a normal recurring nature. All material intercompany balances and transactions have been eliminated. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Form 10-K for the fiscal year ended December 31, 2002. The 10-K is available on the Internet at http://www.sec.gov.

Certain amounts in prior period consolidated financial statements have been reclassified to conform to the presentation for the three and nine months ended September 30, 2003.

TRANSWESTERN PUBLISHING COMPANY LLC
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(ALL DOLLAR AMOUNTS ARE IN THOUSANDS)

FINANCIAL STATEMENT DETAILS

Property, Equipment and Leasehold Improvements


	SEPTEMBER 30,			DECEMBER 31,
	2003			2002

Computer and office equipment	$	14,960		$	14,033
Furniture and fixtures		3,482			3,323
Leasehold improvements		843			802

		19,285			18,158
Less accumulated depreciation and amortization		(14,208	)		(12,714	)

	$	5,077		$	5,444

Acquired Intangibles


		SEPTEMBER 30,			DECEMBER 31,
		2003			2002

Customer base		$	223,044		$	222,174
Goodwill			165,768			164,983
Licensing agreements			1,224			1,224
Non-competes			5,896			5,696

			395,932			394,077
Less accumulated amortization			(187,674	)		(158,956	)

	Acquired intangibles, net	$	208,258		$	235,121

Debt issuance costs


		SEPTEMBER 30,			DECEMBER 31,
		2003			2002

Debt issuance costs		$	17,200		$	17,200
Less accumulated amortization			(7,962	)		(6,213	)

	Debt issuance costs, net	$	9,238		$	10,987

TRANSWESTERN PUBLISHING COMPANY LLC
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(ALL DOLLAR AMOUNTS ARE IN THOUSANDS)

LONG TERM DEBT

On January 15, 2003, the Partnership redeemed the remaining $28.9 million in aggregate principal amount of Partnership’s Discount Notes. In order to fund the redemption, the Company distributed $31.2 million to the Partnership. The Company borrowed $15.0 million of the available $65.0 million on its revolving line of credit and used cash on hand to fund the remaining distribution to the Partnership.

As of September 30, 2003 the Company had total outstanding long term indebtedness of $393.6 million, including $215.5 million of Series F 9 5/8% Senior Subordinated Notes due 2007, $21.8 million of outstanding borrowings under the Term A Loan due 2007, $156.2 million of outstanding borrowings under the Term B Loan due 2008, and $0.1 million in acquisition related debt. As of September 30, 2003 the Company had no outstanding borrowings under its revolving credit facility, with total borrowing availability of $65.0 million.

DIRECTORY ACQUISITIONS

TelFax, Inc. On February 6, 2003, the Company purchased certain tangible and intangible assets of TelFax, Inc. for $2.0 million. The Company acquired two directories in Oregon and one in Washington.

The purchase price for the acquisition above has been allocated to the tangible and intangible assets acquired based on their respective fair values at the date of acquisition, as follows (in thousands):


Customer list	$	870
Goodwill		785
Non-compete		200
Other current and non-current net assets		150

Total consideration	$	2,005

Total consideration paid in the purchase acquisitions is as follows (in thousands):


Cash paid for acquisition	$	1,950
Merger fees incurred		55

Total consideration	$	2,005

Assuming that the above acquisition had occurred on the first day of the Company’s nine month period ended September 30, 2003 and September 30, 2002, the unaudited pro forma results of operations would be as follows:


	Nine months ended September 30,

	2003			2002

	(Unaudited)
Net revenues	$	207,884		$	239,341
Net income (loss)		(6,470	)		9,165
Net income (loss) per member unit		(6,470	)		9,165

These results give effect to pro forma adjustment for the amortization of acquired intangibles and for the additional interest expense on the debt incurred to fund the acquisition.

TRANSWESTERN PUBLISHING COMPANY LLC
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(ALL DOLLAR AMOUNTS ARE IN THOUSANDS)

GUARANTEE

Target Directories of Michigan, Inc., WorldPages, Inc., and TransWestern’s other material wholly-owned subsidiaries, fully and unconditionally guaranteed the Company’s outstanding 9 5/8% Series F Senior Subordinated Notes due 2007 on an unsecured senior subordinated basis. Target and WorldPages, Inc, and its subsidiaries are the Company’s only consolidated operating subsidiaries, other than an inconsequential subsidiary which is a co-issuer of such notes, and has no debt senior to the Notes. The following includes summarized financial data for the Company’s unconditional guarantors:


	Three months ended September 30,						Nine months ended September 30,

	2003			2002			2003		2002

	(Unaudited)						(Unaudited)
Statement of Operations:
Net revenues	$	22,602		$	19,638		$	75,565	$	93,326
Gross profit		18,085			15,383			63,170		76,251
Operating income (loss)		2,135			(2,031	)		12,856		18,263
Net income (loss)		(330	)		(4,922	)		3,274		9,486


	September 30,		December 31,
	2003		2002

	(Unaudited)
Balance Sheet:
Current assets	$	41,420	$	63,962
Non-current assets		180,064		190,605
Current liabilities		22,543		21,756
Non-current liabilities		166,153		206,912

LEGAL PROCEEDINGS

The Company and/or its subsidiaries are parties to various litigation matters incidental to the conduct of their business. Management does not believe that the outcome of any of these matters will have a material adverse effect on the Company’s financial condition or the results of its operations.

GOODWILL

A summary of changes in the Company’s goodwill for the nine month period ended September 30, 2003 is as follows:


	January 1,						Balance at
	2003		Acquisitions (1)		Impairments		September 30, 2003

Goodwill	$	164,983	$	785		—	$	165,768

(1) Acquisition relates to the Company’s purchase price allocation for TelFax, Inc.

TRANSWESTERN PUBLISHING COMPANY LLC
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(ALL DOLLAR AMOUNTS ARE IN THOUSANDS)

NEW ACCOUNTING PRONOUNCEMENTS

In April 2002, the Financial Accounting Standards Board (“FASB”) issued FAS 145, “Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections.” This statement, among other things, changes the way gains and losses from the extinguishment of debt are reported. Previously, all gains and losses from the extinguishment of debt were required to be reported as an extraordinary item, net of related tax effect. Under FAS 145, gains and losses from the extinguishment of debt should be reported as part of on-going operations, unless the extinguishment of debt is both an unusual and infrequent event for the entity. Previously reported extraordinary gains and losses from the extinguishment of debt that are not unusual or infrequent should be reclassified. The Company has reclassified $3.5 million of extraordinary losses recorded during June of the year ended December 31, 2001. The adoption of this statement did not affect reported net income.

In November 2002, the Financial Accounting Standards Board issued Interpretation No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (FIN 45). FIN 45 elaborates on the existing disclosure requirements for most guarantees. FIN 45 requires that at the time a company issues certain guarantees, the company must recognize an initial liability for the fair value, or market value, of the obligations it assumes under that guarantee and must disclose that information in its interim and annual financial statements. The initial recognition and initial measurement provisions of FIN 45 are applicable on a prospective basis to guarantees issued or modified after December 31, 2002. FIN 45’s disclosure requirements are effective for financial statements of interim or annual periods ending after December 31, 2002 and are applicable to all guarantees issued by the guarantor subject to FIN 45’s scope, including guarantees issued prior to the issuance of FIN 45. The Company adopted the provisions of FIN 45 in December 2002. The adoption did not have a material impact on the Company’s consolidated financial statements.

In January 2003, the Financial Accounting Standards Board issued Interpretation No. 46, Consolidation of Variable Interest Entities (FIN 46), which requires extensive disclosures (including certain disclosures that are applicable to December 31, 2002 financial statements) and will require companies to evaluate variable interest entities to determine whether to apply the consolidation provisions of FIN 46 to those entities. Companies must apply FIN 46 to entities with which they are involved if the entity’s equity has specified characteristics. If it is reasonably possible that a company will have a significant variable interest in a variable interest entity at the date FIN 46’s consolidation requirements become effective, the company must disclose the nature, purpose, size and activities of the variable interest entity and the consolidated enterprise’s maximum exposure to loss resulting from its involvement with the variable interest entity in all financial statements issued after January 31, 2003 (including December 31, 2002 financial statements) regardless of when the variable interest entity was created. The consolidation provisions of FIN 46, if applicable, would apply to variable interest entities created after January 31, 2003 immediately, and to variable interest entities created before February 1, 2003 in the Company’s interim period beginning after December 15, 2003. The Company believes that the implementation of the provisions of FIN 46 will not have a material effect on the Company’s consolidated financial statements.

RECENT EVENTS

In October 2003, the Company drew down $3.9 million on its Senior credit facility. During October 2003, the Company also paid $3.9 million on its Senior credit facility.

ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

As used in this item and throughout this Quarterly Report on Form 10-Q, “we”, “us”, and “our” each refer to the Company, the Partnership and their direct and indirect subsidiaries, collectively.

We recognize net revenues from the sale of advertising placed in each directory when the completed directory is distributed. Costs directly related to sales, production, printing and distribution of each directory are capitalized as deferred directory costs and then matched against related net revenues upon distribution. All of our other operating costs are recognized during the period when incurred. As the number of directories that we publish increases, the publication schedule is periodically adjusted to accommodate new books. In addition, changes in distribution dates are affected by market and competitive conditions and the staffing level required to achieve the individual directory revenue goals. As a result, our directories may be published in a month earlier or later than the previous year which may move recognition of related revenues from one fiscal quarter or year to another. Year to year results depend on both timing and performance factors.

Notwithstanding significant monthly fluctuation in net revenues which are recognized based on actual distribution dates of individual directories, our bookings and cash collection activities generally occur at a relatively steady pace throughout the year. The table below demonstrates that quarterly bookings, collection of advance payments and total cash receipts, which includes both advance payments and collections of accounts receivable, generally vary less on a percentage basis than our net revenues or EBITDA. (in millions)


	2003		2003		2003		2002		2002

	3rd Quarter		2nd Quarter		1st Quarter		4th Quarter		3rd Quarter

Net revenues	$	75.7	$	68.6	$	63.0	$	96.8	$	75.0
EBITDA (a)	$	18.6	$	18.0	$	14.8	$	33.4	$	15.2
Bookings (b)	$	82.0	$	85.4	$	67.4	$	83.9	$	88.2
Advance payments	$	44.0	$	35.9	$	31.6	$	34.2	$	34.1
Total cash receipts (c)	$	85.3	$	79.3	$	74.7	$	82.3	$	77.3

(a)

“EBITDA” is defined as net income (loss) before extraordinary item, discretionary contributions to the Company’s equity compensation plans (such contributions represent special distributions to the Company’s equity compensation plans in connection with refinancing transactions), non-recurring management bonuses and fees in connection with the June 2001 recapitalization of the Partnership, plus interest expense, taxes, and depreciation and amortization and is consistent with the definition of EBITDA in the indenture relating to the Company’s notes and in the Company’s senior credit facility. EBITDA is not a measure of performance under accounting principles generally accepted in the United States (GAAP). EBITDA should not be considered in isolation or as a substitute for net income, cash flows from operating activities and other income or cash flow statement data prepared in accordance with GAAP, or as a measure of profitability or liquidity. However, management has included EBITDA because it may be used by certain investors to analyze and compare companies on the basis of operating performance, leverage and liquidity and to determine a company’s ability to service debt. The Company’s definition of EBITDA may not be comparable to that of other companies and is derived as follows (in thousands):


	Three months ended September 30,					Nine months ended September 30,

	2003		2002			2003			2002

	(Unaudited)					(Unaudited)
Net income (loss)	$	370	$	(4,084	)	$	(6,696	)	$	9,105
Interest expense		7,966		8,653			24,590			25,963
Depreciation and amortization		9,805		10,425			30,217			30,663
Tax provision		493		239			3,297			1,042

EBITDA	$	18,634	$	15,233		$	51,408		$	66,773

(b)		“Bookings” is defined as the daily advertising orders received from accounts during a given period and generally occur at a steady pace throughout the year. Bookings generated by predecessor owners of acquired directories are excluded.

(c)		Total cash receipts includes both advance payments and collections of accounts receivable.

RESULTS OF OPERATIONS

The following table summarizes our results of operations as a percentage of revenues for the periods indicated:


	THREE MONTHS						NINE MONTHS
	ENDED SEPTEMBER 30,						ENDED SEPTEMBER 30,

	2003			2002			2003			2002

Net revenues		100.0	%		100.0	%		100.0	%		100.0	%
Cost of revenues		18.6			18.9			17.4			18.1

Gross profit		81.4			81.1			82.6			81.9
Sales and marketing		50.0			49.4			50.3			45.3
General and administrative		20.0			25.6			22.4			21.9

Income from operations		11.4	%		6.1	%		9.9	%		14.7	%

EBITDA Margin (a), (b)		24.6	%		20.3	%		24.8	%		28.0	%

(a)		For a definition of “EBITDA” see the immediately preceding section.

(b)		“EBITDA Margin” is defined as EBITDA as a percentage of net revenues. Management believes that EBITDA margin provides a valuable indication of the Company’s ability to generate cash flows available for debt service.

THREE MONTHS ENDED SEPTEMBER 30, 2003 COMPARED TO THE THREE MONTHS ENDED SEPTEMBER 30, 2002

Net revenues increased $0.7 million, or 0.9%, from $75.0 million in the three months ended September 30, 2002 to $75.7 million in the same period in 2003. The Company published 80 directories in the three months ended September 30, 2003 compared to 73 in the same period in 2002. The increase in net revenues was due to $41.3 million of net revenues associated with 39 directories for which the publication date moved into the period and $4.2 million from eight new directories; offset by $44.6 million of net revenues associated with 40 directories published in the three months ended September 30, 2002 but not in the same period in 2003 (these directories did not meet specific sales objectives in order to publish them in the quarter primarily due to understaffing of sales representatives) and a decrease in the same 33 directories published during both periods of $0.2 million.

The decrease in the same 33 directories published during both periods of $0.2 million or 0.7% was primarily due to a decrease of $2.7 million in revenues associated with an acquired book (San Antonio, TX). The decrease was a result of a large number of customers who had past due balances that were not allowed to renew under our credit policy. Excluding this book, same book revenue growth for the other 32 directories published in both periods was 6.7% as a result of a combination of factors, including the addition of new customers, price increases, increases in the amount of advertising by current customers and new directory features such as colorization of ads, additional ad sizes and additional headings.

Cost of revenues decreased $0.1 million, or 0.8%, from $14.2 million in the three months ended September 30, 2002 to $14.1 million in the same period in 2003. The decrease was the result of $0.3 million of lower costs associated with the 33 same directories and $7.3 million of costs associated with 40 directories published during the three months ended September 30, 2002, but not in the same period in 2003; offset by $1.1 million of costs associated with eight new directories published in the three months ended September 30, 2003 and $6.4 million in costs associated with 39 directories published in the three months ended September 30, 2003, but not in the same period in 2002.

As a result of the above, gross profit increased $0.8 million, or 1.3%, from $60.8 million in the three months ended September 30, 2002 to $61.6 million in the same period in 2003. Gross margin increased from 81.1% in the three months ended September 30, 2002 to 81.4% in the same period in 2003 as a result of lower direct costs on the same 33 directories.

Selling and marketing expenses increased $0.7 million, or 1.9%, from $37.1 million in the three months ended September 30, 2002 to $37.8 million in the same period in 2003. The increase was attributable to increases of $3.1 million in sales support costs in the three months ended September 30, 2003; offset by decreases of $0.4 million in direct sales costs, $1.1 million in provision for bad debt and an increase of $0.9 million in recovered revenue.

Of the increase in sales support costs of $3.1 million, $1.1 million was due to employment recruiting costs and training costs and $2.0 million was due to a general increase in costs associated with personnel and other costs associated with our field sales offices. The decrease in direct sales costs of $0.4 million was as follows: $11.7 million of costs associated with 40 directories that published in the three months ended September 30, 2002 but not in the same period in 2003 and $0.4 million of lower direct sales costs associated with the 33 same directories; offset by $1.2 million of costs for the eight new directories, and $10.5 million for 39 directories moving into the period. Direct sales costs as a percentage of revenue for the same 33 directories published during both periods decreased from 24.0% to 22.9% in the three months ended September 30, 2003 compared to the same period in 2002.

General and administrative expenses decreased $4.0 million, or 21.1%, from $19.2 million for the three months ended September 30, 2002 to $15.2 million for the same period in 2003. The decrease is due to eliminating the bonus accrual of $1.4 million, a decrease in amortization expense related to acquired customer base and other intangibles of $0.6 million, and $2.5 million of costs associated with professional fees in connection with unsuccessful acquisition bids for the three months ended September 30, 2002; offset by a $0.5 million increase in general costs associated with personnel.

As a result of the above factors, income from operations increased $4.1 million, or 90.2%, from $4.5 million in the three months ended September 30, 2002 to $8.6 million in the same period in 2003. Income from operations as a percentage of net revenues increased from 6.1% in the three months ended September 30, 2002 to 11.4% in the same period in 2003.

Interest expense decreased $0.7 million, or 7.9%, from $8.7 million in the three months ended September 30, 2002 to $8.0 million in the same period in 2003 due to a decrease in the rates of interest paid as a result of decreases in Prime and LIBOR rates as well as a decrease in the total amount of debt outstanding.

The provision for income taxes increased $0.3 million, or 106.3%, from $0.2 million in the three months ended September 30, 2002 to $0.5 million in the same period in 2003 due to a change in the effective tax rate of our wholly-owned subsidiaries. Specifically, we were able to utilize net operating losses during the three months ended September 30, 2002 versus no utilization of net operating losses for the same period in 2003.

As a result of the above factors, net income increased $4.5 million, from a loss of $4.1 million in the three months ended September 30, 2002 to income of $0.4 million in the same period in 2003.

NINE MONTHS ENDED SEPTEMBER 30, 2003 COMPARED TO THE NINE MONTHS ENDED SEPTEMBER 30, 2002

Net revenues decreased $31.2 million, or 13.1%, from $238.6 million in the nine months ended September 30, 2002 to $207.4 million in the same period in 2003. The Company published 202 directories in the nine months ended September 30, 2003 compared to 212 in the same period in 2002. The decrease in net revenues was due to $52.6 million of net revenues associated with 46 directories published in the nine months ended September 30, 2002 but not in the same period in 2003 (these directories did not meet specific sales objectives in order to publish them in the period primarily due to understaffing of sales representatives) and a decrease in the same 166 directories published during both periods of $1.7 million; offset by $11.1 million from 19 new directories and $12.0 million from 17 directories for which the publication date moved into the period.

The decrease in the same 166 directories published during both periods of $1.7 million or 0.9% was primarily due to a decrease of $6.1 million in revenues associated with two acquired books (Austin, TX, and San Antonio, TX). The decrease was a result of a large number of customers who had past due balances that were not allowed to renew under our credit policy. Excluding these two books, same book revenue growth for the other 164 directories published in both periods was 1.7% as a result of a combination of factors, including the addition of new customers, price increases, increases in the amount of advertising by current customers and new directory features such as colorization of ads, additional ad sizes and additional headings.

Cost of revenues decreased $7.0 million, or 16.4%, from $43.1 million in the nine months ended September 30, 2002 to $36.1 million in the same period in 2003. The decrease was the result of $2.2 million of lower costs associated with the 166 same directories and $9.0 million of costs associated with 46 directories published during the nine months ended September 30, 2002, but not in the same period in 2003; offset by $2.8 million of costs associated with 19 new directories published in the nine months ended September 30, 2003 and $1.5 million in costs associated with 17 directories published in the nine months ended September 30, 2003, but not in the same period in 2002. Production support costs decreased $0.1 million in the nine months ended September 30, 2002.

As a result of the above, gross profit decreased $24.1 million, or 12.3%, from $195.4 million in the nine months ended September 30, 2002 to $171.3 million in the same period in 2003. Gross margin increased from 81.9% in the nine months ended September 30, 2002 to 82.6% in the same period in 2003 as a result of lower direct costs on the same 166 directories.

Selling and marketing expenses decreased $3.8 million, or 3.6%, from $108.0 million in the nine months ended September 30, 2002 to $104.2 million in the same period in 2003. The decrease was attributable to decreases of $6.5 million in direct sales costs, $4.6 million in provision for bad debt and an increase of $2.2 million in recovered revenue; offset by increases of $9.5 million in sales support costs in the nine months ended September 30, 2003.

Of the increase in sales support costs of $9.5 million, $3.4 million was due to employment recruiting costs and training costs, $5.1 million was due to a general increase in costs associated with personnel and other costs associated with our field sales offices, and $1.0 million was due to new sales offices. The decrease in direct sales costs of $6.5 million was as follows: $13.4 million of costs associated with 46 directories that published in the nine months ended September 30, 2002 but not in the same period in 2003; offset by $3.1 million of costs for the 19 new directories, $3.1 million for 17 directories moving into the period, and $0.7 million of higher costs associated with the 166 same directories. Direct sales costs as a percentage of revenue for the same

166 directories published during both periods increased from 22.1% to 22.6% in the nine months ended September 30, 2003 compared to the same period in 2002.

General and administrative expense decreased $5.7 million, or 10.9%, from $52.2 million for the nine months ended September 30, 2002 to $46.5 million for the same period in 2003. The decrease is due to eliminating the bonus accrual of $3.9 million, a decrease in amortization expense related to acquired customer base and other intangibles of $0.4 million, and $2.5 million of costs associated with professional fees in connection with unsuccessful acquisition bids for the nine months ended September 30, 2002; offset by a $1.1 million increase in general costs associated with personnel.

As a result of the above factors, income from operations decreased $14.6 million, or 41.5%, from $35.2 million in the nine months ended September 30, 2002 to $20.6 million in the same period in 2003. Income from operations as a percentage of net revenues decreased from 14.7% in the nine months ended September 30, 2002 to 9.9% in the same period in 2003.

Interest expense decreased $1.4 million, or 5.3%, from $26.0 million in the nine months ended September 30, 2002 to $24.6 million in the same period in 2003 due to a decrease in the rates of interest paid as a result of decreases in Prime and LIBOR rates as well as a decrease in the total amount of debt outstanding.

The provision for income taxes increased $2.3 million, or 216.4%, from $1.0 million in the nine months ended September 30, 2002 to $3.3 million in the same period in 2003 due to a change in the effective tax rate of our wholly-owned subsidiaries. Specifically, we were able to utilize net operating losses during the nine months ended September 30, 2002 versus no utilization of net operating losses for the same period in 2003.

As a result of the above factors, net income decreased $15.8 million, from income of $9.1 million in the nine months ended September 30, 2002 to a loss of $6.7 million in the same period in 2003.

LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by operating activities was $62.2 million in the nine months ended September 30, 2003 compared to $35.9 million provided in the same period in 2002. The increase in cash provided by operations was primarily due to increased advance payments of $16.0 million and the change in receivables resulting from moving the publication of directories out of the quarter.

Net cash used for investing activities was $3.1 million in the nine months ended September 30, 2003, as compared to $26.1 million in the same period in 2002. Investing activities consist primarily of cash used to acquire directories. In the nine months ended September 30, 2003, $2.0 million was spent to acquire directories compared to $24.0 million in the same period in 2002.

Net cash used for financing activities was $73.6 million in the nine months ended September 30, 2003 as compared to $4.2 million in the same period in 2002. The amounts of cash used for financing activities for the nine months ended September 30, 2003 were primarily for optional pre payments on the Company’s Term B Loan and for distributions to the Partnership for the redemption of the Partnership’s 11 7/8% senior discount notes.

On January 15, 2003, the Partnership redeemed the remaining $28.9 million in aggregate principal amount of the Partnership’s Discount Notes. In order to fund the redemption, the Company distributed $31.2 million to the Partnership. The Company borrowed $15.0 million of the available $65.0 million on its revolving line of credit and used cash on hand to fund the remaining distribution to the Partnership.

Our principal sources of funds are cash flows from operating activities and borrowing availability of $65.0 million under our revolving credit facility. We believe that these funds will provide us with sufficient liquidity and capital resources to meet our current and future financial obligations for the next twelve months, including the payment of principal and interest on our notes, as well as to provide funds for our working capital, capital expenditures and other needs. Our future operating performance will be subject to future economic conditions and to financial, business and other factors, many of which are beyond our control. There can be no assurance that such sources of funds will be adequate and that we will not require additional capital from borrowings or securities offerings to satisfy such requirements. In addition, we may require additional capital to fund future acquisitions and there can be no assurance that such capital will be available.

The senior credit facility and the indentures governing the Company’s notes significantly restrict the distribution of funds by the Company and the other indirect subsidiaries of the Partnership. We cannot assure you that the agreements governing the indebtedness of the Partnership’s subsidiaries will permit such subsidiaries to distribute funds to the Partnership.

FORWARD LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on the beliefs of our management as well as on assumptions made by and information currently available to us at the time such statements were made. When used in this Quarterly Report on Form 10-Q, the words “anticipate,” “believe,” “estimate,” “expect,” “intends” and similar expressions, as they relate to our company are intended to identify forward- looking statements. Actual results could differ materially from those projected in the forward-looking statements. Important factors that could affect our results include, but are not limited to, (i) our high level of indebtedness; (ii) the restrictions imposed by the terms of our indebtedness; (iii) our ability to attract and retain account executives; (iv) the variation in our quarterly results; (v) risks related to the fact that a large portion of our sales are to small, local businesses; (vi) our dependence on certain key personnel; (vii) risks related to the acquisition and start-up of directories; (viii) risks related to substantial competition in our markets; (ix) risks related to changing technology and new product developments; (x) the effect of fluctuations in paper costs; and (xi) the sensitivity of our business to general economic conditions. Additional information with respect to these and other factors that could cause our actual results to differ from those projected are included in the “Risk Factors” section of the Company’s Registration Statement on Form S-4, Registration No. 333-70470, filed with the SEC on October 19, 2001.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to interest rate risk in connection with the term loans and the revolving loans outstanding under our senior credit facility, which bear interest at floating rates based on LIBOR or the prime rate plus an applicable borrowing margin. As of September 30, 2003 there was approximately $27.2 million outstanding under the Term A Loan (at an average interest rate of 3.6% at such time), $157.8 million under the Term B Loan (at an average interest rate of 4.3% at such time), and zero outstanding under the revolving loan. Based on such balances, an immediate increase of one percentage point in the applicable interest rate would cause an increase in interest expense of approximately $1.9 million on an annual basis. We do not attempt to mitigate this risk through hedging transactions. All of our sales are denominated in U.S. dollars, thus we are not subject to any foreign currency exchange risks.

ITEM 4. CONTROLS AND PROCEDURES

As of the end of the period covered by this Report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-15 (e). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective. During the third quarter of 2003, there were no changes in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS


ITEM 2.		CHANGES IN SECURITIES

		None

ITEM 3.		DEFAULTS UPON SENIOR SECURITIES

		None

ITEM 4.		SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

		Not applicable

ITEM 5.		OTHER INFORMATION

		None

ITEM 6.		EXHIBITS AND REPORTS ON FORM 8-K


		(A)		Exhibits.

		31.1		Certification of the principal executive officer required by Rule 13a-14 (a) of the Exchange Act.

		31.2		Certification of the principal financial officer required by Rule 13a-14 (a) of the Exchange Act.

		32.1		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

		(B)		Reports on Form 8-K.

				On August 12, 2003, the Company furnished a Current Report on Form 8-K announcing financial results for the second quarter of 2003.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on November 12, 2003 on its behalf by the undersigned thereunto duly authorized.


TRANSWESTERN PUBLISHING COMPANY LLC
		(Registrant)

BY:	TransWestern Communications Company, Inc.
		(Manager)

BY:		/s/ Ricardo Puente

	Name:	Ricardo Puente
	Title:	President, Chief Executive Officer
		and Director (Principal Executive
		Officer)

BY:		/s/ Joan Fiorito

	Name:	Joan Fiorito
	Title:	Vice President, Chief Financial
		Officer and Assistant Secretary
		(Principal Financial and Accounting
		Officer)

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TRANSWESTERN PUBLISHING CO LLC 10-Q